Celanese ethanol technology could reshape company, industry - CEO

TORONTO (ICIS)--Celanese’s coal-based ethanol technology is a “game changer” that could reshape the US chemicals major and transform the ethanol industry, CEO Dave Weidman said on Thursday.

“This technology breakthrough is a new platform for earnings growth with the potential to reshape Celanese,” Weidman told analysts during a conference call.

He likened the technology’s “disruptive” impact on the ethanol industry to the way Amazon.com revolutionised book-selling around the world.

“We are competing in a totally different way than those who are out there today; that’s where the excitement comes from. This is a tremendously advantaged model … and a totally new way of creating earnings growth for Celanese in the future,” he added.

The company detailed its strategy for China, where it plans one or two 400,000 short tons/year coal-based ethanol plants, in an interview with ICIS on Wednesday.

Celanese’s technology was not based on the fermentation of carbohydrates, but rather was a cost-advantaged thermo-chemical process that used coal and other hydrocarbons as feedstock, Weidman said.

In the future, feedstocks for the technology could also include biomass or even wastes, he said.

Jim Alder, Celanese senior vice president, operations and technical, said that the ethanol technology integrated elements from the company’s leading acetyl technologies.

The technology, which would be protected by some 3,000 patents worldwide, was highly capital-efficient as plant capacities could be increased at a fraction of the cost of the initial facility, he said.

The technology was ready for commercialisation, and Celanese was in the early phase of designing and engineering commercial plants, Alder said.

Weidman added that in the US, Celanese expected to start up a 40,000 ton/year year ethanol plant at Clear Lake, Texas, by early 2013. That facility would be used to drive technology development of the company’s ethanol production process, he added.

Celanese also had set up a team to explore the ethanol fuels market, he said.

Chief financial officer Steven Sterin said that in fuels, Celanese would focus on countries or regions around the world with access to economically attractive hydrocarbons and the desire to cut their dependence on imported energy.

An equally important criterion was that the countries’ policies supported technology and “raw material neutrality - in other words, from an economic standpoint, where there is a level playing field and governments are not selecting winners or losers,” he said.

China met those criteria, but Celanese continued to explore and evaluate other countries around the world. Initial discussions about the technology had been encouraging, Sterin said.

In the US, however, the fuel ethanol market was “a bit more challenging,” Sterin said when asked by an analyst about US subsidies for ethanol.

Sterin said that Celanese’s technology could compete with corn-based ethanol production on a level playing field.

However, challenges in the US were not just the subsidies to corn-based ethanol producers, but also regulations such as renewable fuel standards and legislation that created “an artificial market dynamic,” he said.